If you have worked hard your entire life to build a successful business, it is only sensible that you come up with its succession plan. With a solid plan, you can have peace of mind knowing that your legacy will be in safe hands.
Fortunately, estate planning offers a range of tools that you can use to realize your business succession plan. With the right estate planning tools, you can outline what you’d like to happen to your business in the event of incapacitation or death. And if you get it right, you can relieve your loved ones of the difficult decisions while protecting your business from costly probate.
Here are two estate planning tools that you can use to protect your business.
You can set up a trust
A living trust is one of the building blocks of any estate plan. As an entrepreneur, you can set up a living trust to oversee your business’ day-to-day affairs. But that’s not all – you can also use a living trust to specify what you want to happen to your business when you die. And the best part is, unlike a will, a living trust does not go through probate. This saves time while ensuring a fast and seamless transfer of the business to your designated heirs upon your demise.
You can include a buy-sell agreement
What if you are in a partnership? Well, in this case, you may consider incorporating a buy-sell agreement in your estate plan. With this, you can specify that, upon your death, your partners may (or should) buy your stake with proceeds of the sale being split between your beneficiaries as you stipulate.
Creating a plan
A structured succession plan can outline how your business will be run in the event of incapacitation or death. It can also help your beneficiaries transition business ownership.